BERLIN, Nov 10 (Reuters) - German parties exploring a coalition government remain divided on the issue of a euro zone budget, Europe’s banking union and its ESM bailout fund ahead of a meeting of party leaders later on Friday, according to a draft paper on Europe seen by Reuters.

The 1-1/2 page document, a rough blueprint for a new government’s stance on European issues, contains several bracketed sentences, reflecting ongoing areas of disagreement that must be resolved by Chancellor Angela Merkel and other party leaders at their meeting this afternoon.

“We reject [a separate euro zone budget as well as] the introduction of instruments that would lead to automatic transfers or a mutualisation of debt,” one passage reads, reflecting differences over whether to rule out French President Emmanuel Macron’s idea for such a budget.

The paper contains two alternate phrasings on the banking union, one supported by Merkel’s conservatives and the Greens, and another with more hardline language backed by the FDP, according to footnotes.

“[We want to continue to develop the ESM as an independent institution in order to stabilise the economic and monetary union],” reads another contentious phrase that the footnotes indicate is problematic for the FDP. (Reporting by Markus Wacket; Writing by Noah Barkin)